Andrew Tyrie says changes may not fix FSA flaws
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Treasury select committee chairman Andrew Tyrie has warned the Government’s intended legislative process to replace the FSA may not fix operational flaws.
New legislation is required to replace the regulator with the Prudential Regulation Auth- ority and the Financial Conduct Authority. A new bill can either amend and replace parts of the Financial Services and Markets Act 2000, leaving some parts on the statute book, or replace the FSMA completely.
The Treasury says that reform will be “best achieved” by amending and replacing parts of the act. But the select committee is calling for the legislation to be revisited in its entirety.
Speaking to Money Marketing, Conservative MP Tyrie says amending the FSMA could leave operational flaws. He says: “Fresh legislation would have been an opportunity to revisit what had clearly come to be seen as operational flaws. Witnesses have told us a good deal of what the FSA is doing is not generating the benefits we would hope for.”
During a February evidence session on competition and choice in the banking sector, Tyrie asked Treasury financial secretary Mark Hoban six times if a new bill would be introduced or changes would be made by “dog-eared amendments”.
TSC member Andy Love says: “There was calculated ambig- uity in what Hoban said. He said there will be a new bill related to financial services, whereas the chairman was asking him if we will be starting from the beginning.”
Tyrie says: “Although technically it is a new bill, it is a cut and paste job and there is a risk of importing legislation on areas of regulatory activity where it might have been better to think again.”
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Readers' comments (14)
Tom Scott | 31 Mar 2011 1:47 pm
The only change that needs to be made is to make the FSA and its replacements subject to the rule of law.
The regulated need to be able to hold the regulator to account though the courts. Like the regulated, the senior management at the regulator must be made personally liable for their failings.
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Bob Donaldson | 31 Mar 2011 1:54 pm
It seems that Hoban is just as elusive with the TSC. Keep your teeth into him Mr Tyrie and get it sorted. You are almost certainly going to decimate our industry and all the good that it does within a very short space of time.
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Steven Balmer | 31 Mar 2011 1:57 pm
Tom, I do not think this is the only change required but arguably the first.
It is beyond comprehension that the managemenet at the FSA should continue in their current track without seroisuly looking in the mirror and pre-empting some of what these changes are suppossed to bring about.
When Hector Sants said to the TSC that parliament should look at the FSMA, and not look to the FSA to be held accountable, yet more alarm bells should have sounded.
It seems Andrew Tyrie is one of the few MP's who have the measure of these people and is not intimated or mesmerised by their usual sound bites.
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Incompetent Regulators Awards Team | 31 Mar 2011 1:59 pm
As Tom Scott said any regulator should all be accountable for their mistakes and subject to the rule of Law. How many would we see in court if that was the case now? The place would fall apart.
The only solution is a new Act and new staff with none of the Labour placed men.
The FSA helped bring down the UK economy allowing the banks to run amok, that alone should be anough reason to make dramatic changes.
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Simon Mansell | 31 Mar 2011 2:07 pm
Agreed with Tom Scott. The FSA is unconstitutional in that it has been granted powers in excess of its accountability. Power currupts, absolute power currupts absolutely.
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DH | 31 Mar 2011 2:16 pm
It sounds like Mr Tyrie is getting as sick as we all are with the Hoban / Sants regime. They cant even P*** straight, let alone give honest answers to valid questions.
Having to ask Hoban 6 times for an answer, just shows you the arrogance of the man.
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Anonymous | 31 Mar 2011 2:23 pm
The FSMA needs to be completely replaced.
Andrew Tyrie knows this.
It was rushed through when it was established, giving the fsa too much power, which is why we have so many problems such as no longstop no accountability for the regulator and a situation which is akin to being governed by a stalinist regime for the regulated.
The fsa also needs to apply for its budget, rather than simply setting it at whatever figure it draws from thin air.
The Leviathan is still very much alive Mr Tyrie, we are relying on you to tame it.
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Mike | 31 Mar 2011 2:36 pm
The FSA & replacement needs a "root & branch" approach to changes. Madness is to keep doing the same thing time after time and expecting a different outcome. It is a folly to change the name of the FSA, keep the same people and operational status and expect a better outcome. Any other business would have had directors and employees sacked and proceedures & accountability put into place to ensure such a travesty would never happen again.
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Exasperated me | 31 Mar 2011 3:58 pm
The regulatory choo choo has hit the buffers. Or is it a Regulatory Humpty Dumpty? Either way all the Kings Horses and all the Kings men will fail to put it back together again...
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Julian Stevens | 31 Mar 2011 11:26 pm
If only the FSA was required to observe the Statutory Code of Practice For Regulators, then many of these concerns could be addressed at a stroke. It's Statutory which, as I understand it, means it's the Law. Aren't the TSC or Mr Tyrie even aware of it?
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